But he said working Papuan New Guineans can get some respite through the state home ownership program with the Bank South Pacific that is now available to them.
The Prime Minister responded to North Fly MP James Donald in Parliament this morning calling on the government to consider the income tax cut.
Despite acknowledging the many challenges the country is currently facing, such as the global pandemic and its impact on the economy, Mr Donald, a member of the opposition, proposed the cut.
Prime Minister Marape thanked the Papua New Guineans, who pay individual taxes, for their strength in maintaining the state budget while the country continues through some of its most difficult times.
“Income tax remains the highest taxpayer in the country, ahead of corporate income tax and goods and services tax (GST), and together contributes between K10 and K11 billion to the state budget each year,” the Prime Minister revealed.
He said that even then, the budget target for development spending of around K19 billion a year will not be met, forcing working Papuan New Guineans to still shoulder the tax burden.
But the Prime Minister is optimistic that the current work of the Internal Revenue Commission (IRC), led by Sam Koim, will broaden the tax base to capture the “shadow economy”. Those companies and individuals who have evaded taxes.
He is certain that a reduction in PIT can happen soon, very likely in the next five to six years.
“At this point we cannot make this very critical call. We cannot afford to reduce the PIT. Anyone in the opposition can say you can, but when you are in government you will find that the need for the development budget has increased and is above the money we make, “said the Prime Minister.
He added: “Of the K10-11 billion we earn each year, an average of around K6.5 billion goes to salaries alone (parliament, judiciary, civil service, bougainville); 2 billion to 3 billion K for the current budget (electricity, water, utilities). That is a total of 8 to 9 billion K for recurring expenses alone.
“It would be irresponsible for me to try to appease everyone by saying ‘yes, we can consider a tax cut’. Our country must collect all the income that we need to collect. “
However, the Prime Minister assured that this could be done in the near future as the government now “brings more taxpayers into focus, especially those companies and individuals who operate in the ‘black economy'”.
“We are also becoming aggressive to get more revenue from our resource projects into the country. This work will take the next two to three years and hopefully around 2025 or soon after we can consider cutting the workers tax or the PIT, ”Prime Minister Marape said.
Meanwhile, the Prime Minister urges working Papua New Guineans in both the public and private sectors to take advantage of government-sponsored programs that have been put in place to increase their livelihoods, such as the GNP First Home Ownership Scheme .
The BSP program provides an interest rate of 4 percent and a 40-year loan period for employees in Germany.
“We are demobilizing underdeveloped state land across the country in order to hand over workers to partner banks such as BSP for housing construction. The government will provide free land to public and private tax-paying workers so they can build your house. This is the government’s way of saying thank you. “